The markets remain in a strong uptrend.

Last week was another incredible week for the markets with the S&P 500 finishing up 1.2%.

All four major stock market indices have reached new all-time highs together. The last time this happened was in 2021. This is a rare sign of broad market strength.

It is not just U.S. stocks that are performing well, the strength is global. At the moment, there are no signs of stress in equity markets worldwide. Instead, it’s clear that investors are allocating capital not only across asset classes but also regions.

More rate cuts are coming.

And when interest rates are cut, keeping money in cash becomes less attractive.

Money market funds reached a new record high this week with $7.3 trillion in assets.

They had been paying over 5%, but as rates move lower, the payouts are shrinking. Now it’s likely starting to move into other assets where investors expect to earn more, which could push this bull market even higher.

Outside of recessions, Fed rate cuts tend to be extremely bullish for equities. The picture is very different if cuts happen during a recession, but that is not the case today.

Looking back at past easing cycles, equities (especially small-caps and growth stocks) have usually been the best-performing asset class.

The drivers of the S&P 500’s current rally are not just higher valuations but genuine business improvements. Companies are growing their sales and expanding profit margins. That is much more important than shifts in how much investors are willing to pay for stocks.

AI has become one of the key engines of earnings growth in this cycle. Almost all of the margin expansion is being driven by AI-related companies, while all other sectors have remained pretty much flat.

As long as companies continue to grow their revenues and expand their profits, it is difficult to see this bull market coming to an end anytime soon. Of course, it will not be a one-way street. Markets never move up in a straight line, and corrections or pullbacks are part of every cycle. But as long as the underlying fundamentals remain strong, those dips are more likely to be healthy pauses and buying opportunities rather than signals of a lasting downturn.